DISPUTE BOARDS IN CONSTRUCTION PROJECTS: A WAY FORWARD?

For those outside the construction industry, it may be difficult to accept the notion that disputes are a natural part of any construction project. Yet construction projects involve a substantial number of companies and individuals with complex interests and relationships. It is, therefore, unsurprising to see disputes arising from major construction projects.

While the idea of eliminating disputes from construction is far-fetched, the question does arise as to effective ways to swiftly and efficiently resolve them. One of the ways the industry has evolved to provide a solution is with dispute boards (DBs).

The International Chamber of Commerce (ICC) defines DBs as: “a standing body composed of one or three DB Members. Typically set up upon the signature or commencement of performance of a mid- or long-term contract, they are used to help parties avoid or overcome any disagreements or disputes that arise during the implementation of the contract. Although commonly used in construction projects, DBs are also effective in other areas. These areas include research and development; intellectual property; production sharing and shareholder agreements.”

The board, or panel or tribunal (as some also like to call it) is usually composed of one or three members, experts in their field. The dispute boards functions are twofold: (i) to avoid disputes; and (ii) to resolve those disputes which have not been avoided.

Statistics show that 97 percent of disputes arising in a contract with a dispute board are settled by such dispute boards, avoiding arbitration or litigation. This is undeniable evidence of their potential success.